Neider Boucher | Wisconsin LLC Election Update

22 Jun Wisconsin LLC Election Update

Posted at 13:03h in Attorney Articles by Terri Neider

By the end of 2022, approximately 4% (there are thousands) of existing limited liability companies in Wisconsin chose to retain the Limited Liability Law that existed prior to the restated Limited Liability Company Act which went into effect on January 1, 2023. You may recall that entities had a choice as to whether to be governed by the old Wisconsin LLC law or the new Wisconsin LLC law. To qualify to be governed by the old Wisconsin LLC law, the entity had to file a form of non-applicability by December 31, 2022.

Why would an LLC have chosen to retain the old law? There may be several reasons:

To make sure that no single member can veto major decisions as is frequently possible under the new updated Wisconsin law;
To retain the LLC’s fiduciary duty rules made in specific provisions of the operating agreement as the new law updated and reformed fiduciary duty rules; and
To retain the old agency rules which were totally eliminated by the new law.

Why is it important for attorneys and other professionals to know whether an LLC chose to retain the old law? To provide proper counsel, for example:

If you are representing an entity for the first time, you should determine which law applies and how the entity’s LLC election affects its operations, or its operating agreement, if there is one.
If you are providing representation in the sale of the LLC, again, you want to know which law applies to the entity, the old Wisconsin LLC law or the new Wisconsin LLC law and how that may impact the sale.

As it happens, it is relatively easy to find out whether a Wisconsin LLC has chosen to elect non-applicability by going to the Wisconsin Department of Financial Institutions website and search for the entity under the Business Services section. Under the entity’s Historical Information, you will find the Chronology section. There you can find out when the entity was organized, if a registered agent has changed, and if the entity’s articles of organization have been amended including filing a Statement of Nonapplicability.

See below.